The use of irrigated water for farming was a particularly sticky point during the election.

It was an issue that had farmers out marching in protest; one that led to NZ First leader Winston Peters ruling out a key Labour Party policy - a tax on irrigated water.

On Friday, the Provincial Growth Fund allocated $543,000 for the next stage of the Makauri Managed Aquifer Recharge trial in Gisborne. The project aims to inject water from the Waipaoa River into the aquifer for use on 3000 hectares of irrigated horticultural farm land.

The trial itself is not a Labour-led Government initiative - it was started by Nathan Guy in 2017 under the National Government.

At Friday's announcement, Regional Economic Development Minister Shane Jones acknowledged irrigation as "a tricky area in regional development", saying: "It's best that I deal with it openly.

"I'm announcing today a small recharge scheme for irrigation will be eligible, but, folks, read my lips: this Government will no longer back the uber mega irrigation schemes of the last regime," he said.

"But it will not walk away from meeting its obligations to work with local communities in an environmentally robust way, and provide landowners and industry with enough water to fully release the potential of areas such as Poverty Bay.

"A difficult area of politics, but one we are not shying away from."

Shane Jones at Ratana earlier this year,
Photo credit: Newshub.

Mr Jones - and Mr Guy before him - argues the 3000 irrigated hectares employ about 10 percent of the local workforce and produce $160 million a year.

But environmental organisation Forest and Bird says the aquifer recharge scheme is "risky".